Weekly Report - 13 March 2008 (ISSN 1741-7422)

CHILE | Slow growth. The economy grew by 3.4% in January on the same month in 2007, according to the central bank. This fell one point below expectations. The bank said growth had been affected by an increase in the value of electricity generation and a fall in mining activities: copper production fell 1.4% in January from a year before, reflecting an overall 2% decline in total mine output. Copper broke through the US$4 a pound threshold on the London Metal Exchange on 6 March, the highest ever in nominal terms. The increase in international copper prices means that the Chilean peso hit a 10-year high against the US dollar, prompting the finance minister, Andrés Velasco, to say that while the prices were unprecedented they were "temporary" and did not justify the excessive currency gains. The government has other problems too: inflation was 0.4% in February - the highest in February for five years - bringing 12-month inflation to 8.1%; and President Michelle Bachelet was forced to concede that at some point there might have to be energy rationing. The threat of rationing may have been staved off though: on 11 March the government announced that Argentina had promised to send bigger volumes of natural gas up until May.